Although it seems that ad blockers are the biggest danger faced by the online advertising industry this is not true, because ad blockers cost the industry “only” 715 million euros a year, which is only 10 percent of the total damage which, in the opinion of the IAB, is caused by other factors such as traffic generated by bots and piracy.
The research, which was done for the IAB by global company Ernst & Young, shows that there are three major factors contributing to such huge damages suffered by the online advertising industry each year. First are the ad blockers and malicious software (malware). IAB considers that the use of ad blockers is a side effect of the spread of malicious software that causes damages worth one billion euros. As noted above, out of that figure, IAB estimates that 715 million euros relates to ad blocking, while the costs associated with the research, repair and documenting the immediate effects of malicious adverts, amounts to 187 million euros, while 15.6 million is intended for third parties to monitor ads and identify malicious software.
More than half of the damages, according to the IAB, is generated by the internet traffic made by robots (aka. bots), amounting to around 4.2 billion euros. Most of the damage is produced through bogus traffic on desktop computers (approximately 2.9 billion euros), the rest belongs to traffic on mobile devices. According to IAB assessments, the fight against “bots” each year costs 155 million euros.
Another 2.2 billion euros loss is caused to the internet advertising industry by pirated content – stolen video content, music and other editorial content that is illegally distributed online. Industry – mainly creators of content – currently spend 30.2 million euros per year to combat piracy. According to IAB assessment, the elimination of piracy would bring 1.8 billion euros to television, film and music industry, as well as additional 417 million euros in advertising money.
“To help the industry reclaim some of the €7.5 billion in costs, we believe that improving some fundamental business practices is critical,“ believes Nick Terlizzi, a partner at Ernst & Young. These, according to him, include knowing your partners and using address information, tax IDs and background checks.
